Question
Laker Company reported the following January purchases and sales data for its only product. The Company uses a periodic inventory system. For specific identification, ending
Laker Company reported the following January purchases and sales data for its only product. The Company uses a periodic inventory system. For specific identification, ending inventory consists of 330 units, where 300 are from the January 30 purchase, 5 are from the January 20 purchase, and 25 are from beginning inventory.
Date | Activities | Units Acquired at Cost | Units sold at Retail | ||||||||||||||
Jan. | 1 | Beginning inventory | 200 | units | @ | $ | 12.50 | = | $ | 2,500 | |||||||
Jan. | 10 | Sales | 160 | units | @ | $ | 21.50 | ||||||||||
Jan. | 20 | Purchase | 130 | units | @ | $ | 11.50 | = | 1,495 | ||||||||
Jan. | 25 | Sales | 140 | units | @ | $ | 21.50 | ||||||||||
Jan. | 30 | Purchase | 300 | units | @ | $ | 11.00 | = | 3,300 | ||||||||
Totals | 630 | units | $ | 7,295 | 300 | units | |||||||||||
rev: 10_06_2020_QC_CS-232448
Required: 1. Complete comparative income statements for the month of January for Laker Company for the four inventory methods. Assume expenses are $1,850, and that the applicable income tax rate is 40%. (Round your average cost per unit to 2 decimal places.)
2. Which method yields the highest net income?
multiple choice 1
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LIFO
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Specific identification
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FIFO
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Weighted average
3. Does net income using weighted average fall between that using FIFO and LIFO?
multiple choice 2
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Yes
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No
4. If costs were rising instead of falling, which method would yield the highest net income?
multiple choice 3
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Weighted average
-
Specific identification
-
FIFO
-
LIFO
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